JST GROUP (06687) has announced a profit alert, projecting that the group will record a net loss attributable to its equity holders in the range of approximately RMB 1.6 billion to RMB 1.7 billion for the fiscal year ending December 31, 2025. This represents a shift from the net profit of about RMB 12.2 million reported for the year ended December 31, 2024.

Based on the information currently available to the board, the change from a net profit to a net loss for the 2025 fiscal year is primarily attributed to a significant loss arising from the company's issuance of convertible redeemable preferred shares. These shares were issued prior to the company's listing on The Stock Exchange of Hong Kong Limited on October 21, 2025, and were automatically converted into ordinary shares following the listing.

For the year ending December 31, 2025, the loss associated with these preferred shares is approximately RMB 1.77 billion, a substantial increase from the approximately RMB 18.5 million recorded for the year ended December 31, 2024. This increase is mainly due to the fair value change of the preferred shares, driven by a significant rise in the company's market capitalization post-listing.

The board emphasizes that the loss on the preferred shares is a non-cash item and is not expected to have a material adverse effect on the group's cash flow. Consequently, the company's business operations remain stable.

However, based on current information, the group anticipates achieving an adjusted net profit for the year ending December 31, 2025, which is prepared based on a non-International Financial Reporting Standards (non-IFRS) measure, in the range of approximately RMB 180 million to RMB 230 million.

The board believes that presenting the adjusted net profit, a non-IFRS measure, is beneficial for comparing operational performance across different periods and with similar peer companies, as it eliminates the potential impact of certain specific items. The board defines adjusted net profit/(loss) (a non-IFRS measure) as the annual net profit/(loss) after adding back the following items: loss on preferred shares; share-based payments to employees; listing expenses related to the IPO; foreign exchange loss/(gain); and fair value loss/(gain) on non-listed equity investments.